Oct 15 2015
Last week we discussed how organizational culture is one of the most important competitive advantages for companies large and small. No matter how well planned or infallible your business strategy might seem, it’s impossible to implement a winning strategy without a flexible and resilient corporate culture. In last week’s post, we looked at some of the drivers behind a successful culture. This week we will dive into a real life example that uncovers how data deprivation is the new silent killer.
Going Full Circle
There is one specific example from my past which shines a light on the issue of data deprivation in the retail industry. At one of my previous employers, data was strictly siloed in the analytics department. This resulted in huge backlogs for ad hoc analysis requests, which ultimately bred a culture of indifference when it came to using data to support decision-making. And each year, this data-deprived culture cost the company thousands – if not millions – because the company was reactive when it came to using data and documenting past results. One year during back-to-school season, our company ran a promotion to attract university students. The coupon offer was a percentage discount when you spent over a minimum threshold. The minimum spend was based on the exact same promotion from a year earlier, and the promo discount was an arbitrary figure that “felt right”. Several weeks after running the promotion, the analytics team came back with a report showing that the promotion had a total of zero redemptions. The post-mortem analysis uncovered a disconcerting situation, as well as a few notable red flags:
- The data showed that students did not typically spend anywhere near the target minimum spend. In fact, students were being asked to double their average spend just to take advantage of the minor discount.
- The data showed that last year’s promotion also had a high negative ROI. But unfortunately this information was only uncovered after it was already too late.
This was an eye-opening event for me. It was just like one of those business cases that you read about in school. Except this time it was happening in real life, and with real dollars being wasted. At this particular company I was also given the opportunity to rotate through 3 different departments over the course of 2 years, gaining a unique view of the organization from 10,000 feet. This was a very telling experience, as I was able to see how 3 unique departments used data in very different capacities. One of the key takeaways from this experience is that a team’s culture is largely shaped by business visibility and management’s continued communication of progress towards the team’s objectives. For instance, the Business Analytics group encouraged a culture of curiosity, where individuals could find the answers to their questions right away and then deliberate over the insights. This culture cultivated a group that would think outside of the box, and come up with intelligent business tactics to boost the bottom line. Most importantly, no tactic was ever undertaken unless it was first supported by historical data and reasonable assumptions. And even then, most programs would undergo a pilot testing period before it was launched across the entire organization. This methodical and data-focused approach not only resulted in a strong track record of success, but it also promoted a culture that was informed and driven by measurable results.
The Need For a Data-Driven Culture In The Retail Industry
Retailers and consumer product companies are particularly frightened by these types of scenarios, whereby a lack of business visibility results in uninformed, costly decisions. Whether it’s a failed product launch or a failed promotion, top brands are tired of wasting valuable resources on bad decisions or reactionary measures. In an interview with the Harvard Business Review, Filippo Passerini – group president of global business services and CIO for Procter & Gamble – insists that data is the key to solving the issues rooted in a data-deprived culture. At P&G “analytics accelerates our decisions because everyone is now looking at the same reality,” he says. “Decisions come down to ‘what,’ ‘why,’ and ‘how.’ Many organizations spent a lot of time debating the what because different people had different data. Once everyone has the same version of truth, you can shift to the how—and you are able to do more and more better and better.” So whether you’re a company competing in the fierce retail space, or you’re just trying to instill a norm of informed decision-making across your organization, be sure to keep your culture top of mind when crafting your business strategy. And most importantly, don’t be misled by the myth that your company’s culture is fixed and uncontrollable. Rather, start taking stock in the idea that your team is the gateway to your company’s success and take charge of the opportunity to build a winning culture around data, insights, and smarter decisions.